This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Can Satya Nadella Turn Microsoft Into the Next Apple?

The cloud computing revolution has been underway for many years now. Already Amazon has seized market dominance in Platform as a Service cloud technology, with Google a close second. Microsoft has been a contender in PaaS, but is a distant third place runner-up and is not likely to dethrone either Amazon or Google any time soon. Once market dominance is firmly established by a company, it is nearly impossible to seize that dominance away from the No. 1 company, as we've seen in prior technology booms.

In order to dominate a key area of the cloud, Microsoft must reinvent, much like Steve Jobs did. The company needs to reimagine a product that is already popular but needs a totally innovative new approach. What this will require is something investors and consumers have not seen from Microsoft in over a decade.

Nadella needs more than focus. He needs inspired new technology.

Luckily, technicals lead fundamentals.

If Microsoft is able to create something that the buy-side institutional investors are excited about, we'll see it in the stock's charts. For technical investors and traders, a critical technical factor for considering investment in Microsoft is a  price that is sustained above the prior highs of the trading range at $42. If the breakout doesn't sustain, then the stock price will drop back into its range, continuing sideways.

A breakout would require significantly more volume than is present at this time, along with large-lot indicators confirming. This would be a position style to long-term entry. Position-style trades are held for several days to several months.

This technical pattern entry is what I call a compressing-platform breakout for buying into strength. Support from the platform is moderate for a position-style trade at the highs of the range. Long-term support is at the lows of the range and is moderate. Moderate support is used for strongly uptrending markets and is not suitable for holding during an intermediate-term correction or bear market.

The next technical resistance level is $53, which is also a fundamental yearly resistance level.

Institutional ownership of the stock is currently at 74%, which has been increasing slightly month-over-month this year according to TC2000 charting data from Note: Dow components have an average of 71% institutional ownership. The largest institutional owner is Vanguard, which is a giant buy-side institution, with 379,853,558 shares held as of March 31, 2014. Vanguard increased its holdings in the first quarter of 2014 by 2%. Microsoft's stock would do well if this trend continues.

For now, short-term technical patterns show that smaller funds and smaller lots control the stock price.

See more from Martha Stokes, CMT, at

Biotech Stock Mailbag: Zafgen, Bluebird, MannKind

American Apparel: Is It Fit for a Buyer?

Watch Out! Complacency Dramatically Ups Your ETF Portfolio Risk

Coach Loses Out to Luxury Makers Kors, Kate Spade: StockTwits

At the time of publication, the author held no positions in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

All statements are the opinions of Martha Stokes CMT and are not to be construed as anything more than opinions. Martha Stokes CMT is not a broker or an investment advisor; she strictly provides an educational service. There is risk in trading financial assets and derivatives. Due diligence is required for any investment. Examples presented are for educational purposes only.

2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $95.03 0.21%
GOOG $691.02 0.00%
FB $116.73 0.00%
TSLA $247.54 -0.07%
YHOO $36.59 0.00%


Chart of I:DJI
DOW 17,830.76 -210.79 -1.17%
S&P 500 2,075.81 -19.34 -0.92%
NASDAQ 4,805.2910 -57.85 -1.19%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs